Global Macro: Another dose of positive vaccine news – Moderna announced today that its COVID-19 vaccine trial is 94.5% effective against in preventing disease, according to its first interim efficacy analysis. The trial surpassed the 53 case count which the trial pre-specified as in its trial protocol and was based on 95 cases of COVID-19 (90 of which occurred in the placebo group). This means that confidence intervals are tighter than if the analysis was based on 53 cases. The interim analysis did not report any significant safety concerns.
Based on this interim safety and efficacy data, Moderna intends to make a submission for an Emergency Use Authorisation (EUA) with the US Food & Drug Administration (FDA). Earlier this morning, the European Medicines Agency (EMA) also started a rolling review of the Moderna vaccine. The company expects to ship approximately 20 million doses this year and is on track to manufacture 500 million to 1 billion doses in 2021. Moderna’s vaccine is a two-dose product.
Perhaps as big of a news was communicated in a separate press release in which Moderna states that its vaccine candidate is now expected to remain stable at standard refrigerator temperatures of 2C to 8C for 30 days, up from previous estimate of 7 days. Shipping and long-term storage conditions are still at -20C for 6 months. This means that the Moderna vaccine could become available sooner to countries with insufficient cold-chain logistics in parts of Asia, Africa and Latin America.
The positive vaccine news from Moderna, following hot on the heels on the Pfizer analysis, increases our conviction in a strong and sustained acceleration in global economic growth during the course of next year. It looks increasingly likely that several emergency vaccines will be rolled out in the coming months and we could see high degrees of immunity achieved for vulnerable groups and key workers sometime in the second quarter of next year. We judge that this will allow governments to significantly lift restrictions in Q2 and – especially – Q3, triggering a rapid bounce in economic growth.
The brightening prospects for next year are at odds with the deteriorating near term outlook, given new waves of the virus and the stepping up of restrictions in a number of major economies. Indeed, we expect a contraction in economic growth in Q4 in most major advanced economies, which means the macro news flow is set to become much more negative. However, given increased conviction in prospects for next year, we think investors will look through the near term weakness, especially if central banks manage to anchor bond yields as we expect. Investor sentiment has also been supported by signs of sustained economic recovery in China – see below. (Daniel Ender & Nick Kounis)
China Macro: Normalisation continues – The monthly activity data for October published today confirm that China’s economic recovery is still broadening. The gap between the supply and the demand side continues to narrow, in line with our expectations (see our report China: Supply-demand gap will narrow). Industrial production growth was stable at 6.9% yoy in October (versus +6.7% expected), while growth of both retail sales and fixed investment picked up further. Retail sales accelerated to 4.3% yoy (September: 3.3%), although coming in below expectations (consensus: 5.0%). China’s official unemployment rate has fallen back to pre-corona levels (October: 5.3%, vs 5.4% in September and 5.2% in December 2019). Urban fixed investment accelerated to 1.8% yoy ytd (September: 0.8%, consensus: 1.6%). To a large extent, that is a reflection of pandemic fiscal support, with public investment (+4.9% yoy in Jan-Oct) still doing much better than private investment (-0.7%). All in all, Bloomberg’s monthly GDP estimate rose to a 16-month high of 6.9% yoy in October (September: 6.75%), although the pace of acceleration has come down in recent months. (Arjen van Dijkhuizen)